Role of Chinese businesses in global trade


 

FOR better or worse, the role of the Chinese overseas in South-East Asia’s development has long been a subject of discussion, if not debate.  

This role, set against the rise of China, is the theme of a collection of papers written for a workshop hosted by Singapore’s Institute of Southeast Asian Studies (Iseas) in April 2005. Edited by Leo Suryadinata, Southeast Asia’s Chinese Businesses in an Era of Globalization: Coping with the Rise of China (Singapore: ISEAS 2006) deals with both the impact on this community of globalisation in general as well as of China in particular. 

These themes are clearly closely linked. China looms large not only in Asia’s globalisation but also its economic integration. Chinese overseas businesses (COBs) respond to the forces of globalisation within the constraints imposed by their domestic circumstances. 

How well does this volume deliver on examining this link? 

As an update on the Chinese overseas businesses, there is much that is of interest. Accounts of the exploits of COBs – the CP Group of Thailand, Genting, Hong Leong and others of Malaysia, Lucio Tan, et al of the Philippines – in their respective countries and their ventures in China –are rich in detail. 

Accounts of government policies provide interesting insights into the challenges COBs face, of which the growing economic might of China represents only one dimension. 

Several papers more directly address the first of the workshop’s two themes – the impact of globalisation on COBs and their responses. 

But beyond these interesting updates and details, there are few surprises, let alone new insights. Besides positing well-known generalisations, some arguments advanced citing the role of culture and ethnicity – Confucian values (Efferin-Pontjoharyo) and “cultural affinity” and “ethnic advantage” (Ng) – are highly contentious. 

There are as many Confucian values that are antithetical to business as there are for. What makes COBs choose only those that are helpful to business? Nor are these “Confucian” values unique to East Asia. 

Hence, whether there is such a thing as a “conventional COB model” (Efferin-Pontjoharyo) is debatable. 

Although aware of differences between the COB conglomerates and the much more numerous small and medium-sized enterprises (SMEs), the papers gave much more extensive and detailed treatment of large COBs. 

This is understandable. After all, there is a lot more information about the former than about the latter. Unfortunately, as in other studies of COBs, this may give the wrong impression of the nature and overall significance of COBs. Despite their disproportionate share of investment, output and product range, COBs are not all conglomerates. 

And the conglomerates themselves, despite what at least one writer (Viraphol) believes, are not that material for China. 

Few of the papers that dealt with the first theme devoted much time to the relationship between COBs and the rise of China. Fortunately, the few that did provided interesting analytical discussions. In particular, Lee Poh Ping and Lee Kam Hing, grounding their analysis on available statistics, came to several significant conclusions. 

They are that (1) China’s impact on COBs varies by nature of business and size of business, and economic aggregate (trade vs investment, imports vs exports) but (2) the overall impact, in terms of revenue and job loss, business failure, etc is hard to determine; (3) some SMEs, unable to compete in manufactures, have resorted to importing and distributing Chinese products; and (4) the role of the much-touted Chinese overseas business networks is not much in evidence. 

But China’s overall impact, in terms of loss of revenue, closure of business, loss of jobs, etc, is difficult to determine. 

Ang-Go also showed that (5) COBs, far from networking, often compete one with another and (6) large businesses are no less liable to encounter difficulties in doing business in and with China as smaller companies. 

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